Australia – Company Operating Profits

At GMT 12:30 a.m., the Australian Bureau of Statistics released the quarter-over-quarter company operating profits statistics, which measures the changes in the total value of profits earned by Australian corporations over the past quarter.

Binary options traders and global market participants consider this data to be an important leading indicator of the Australian economy as company earnings provide an early signal regarding future economic activities, including level of corporate budget, spending and job creation. Furthermore, company earnings are directly correlated with future investments made by the private sector as well.

Last quarter, Australia’s company operating profits decreased by 0.4% and the forecast for this quarter was set at an increase of 0.7%. However, the actual figure suggested that this quarter, the operating profits actually went down by 0.2%.

United Kingdom – Nationwide House Price Index (HPI)

At GMT 6:50 a.m., the UK’s Nationwide Building Society released their house price index, which measures the changes in the selling price of houses that are bought using mortgages issued by Nationwide.

Since rising house prices encourage home buyers to purchase new homes with the expectation that their investment value will increase over time, an increasing HPI is considered good for the overall economy. Hence, binary options traders consider the Nationwide house price index to be a leading indicator of the UK’s economy.

Last month, in January, the Nationwide house price index came increased by 0.3% and the forecast for this month was set a higher rate of increase, at 0.4%. However, the actual figure suggested that the house prices over the past month actually decreased by 0.1%.

Trade Recommendation for the GBP/AUD

The GBP/AUD has established a steady bullish trend since the second week of November 2014 and formed an upward sloping equidistant channel in the process. On February 3, the GBP/AUD price reached the upper end of the equidistant channel.

Subsequently, it found strong resistance around the 161.8% Fibonacci extension level of the previous major downward swing, which is situated around the 1.9900 price level.

Although the GBP/AUD price trend is up, worse than expected operating profits from Australia would have a broader impact on the economy compared to the Nationwide HPI in the UK, as it only covers the housing sector. Furthermore, as the current price level is near the upper end of the equidistant channel, it may retrace significantly over the next few weeks prior to gaining further bullish momentum.

Under the circumstances, if the GBP/AUD breaks below the intermediate support around 1.9575, it may find additional bearish momentum that may push the price towards the 100% Fibonacci retracement level. Hence, it is recommended that binary options trader consider placing PUT orders with the GBP/AUD once the price breaks and the daily bar closes below the 1.9575 support level.

About our Forex Analyst: Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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